WASHINGTON – The ongoing mortgage crisis continued to take its toll on the nation’s savings and loans, which reported a $617 million loss for the first quarter.
The 831 S&Ls set aside a record $7.6 billion to cover losses on problem loans in the first quarter as the mortgage crisis deepened. The thrifts set aside $5.5 billion for loan losses in the previous quarter and $1.2 billion in the first quarter of 2007.
The first quarter losses, however, were an improvement from the fourth quarter when the S&Ls lost $8.75 billion as they moved billions of additional funds into loan loss reserves.
John Reich, director of the Office of Thrift Supervision, lamented the first quarter losses but said the increase in loan loss reserves should strengthen the S&Ls. “This forceful response to the housing market crisis continues to depress industry earnings, but it also strengthens institutions to withstand future challenges,” Reich said.
